2016 Director Stock Ownership GuidelinesZoom inDownload PDF
Since boards of directors are responsible for aligning company affairs with shareholder interests, companies often implement director stock ownership guidelines to ensure that board members are invested in the company’s current and future performance. These guidelines typically require that directors own at least some specified amount of company equity and that they hold equity granted as compensation for a minimum period before selling those shares.
In recent years, investor activism has brought increasing attention to director ownership guidelines and compliance, and shareholders increasingly want to see that directors have an incentive to ensure the company is performing well, both in the short-term and the long-term. Company ownership is increasingly concentrated in public and private pension funds and with other institutional investors, which have gained support from federal legislative and regulatory initiatives. The degree that directors are monetarily invested in a company’s long-term growth can significantly impact shareholder support of the proposals directors bring to them.
In this report, Equilar examined trends in design and prevalence of director stock ownership guidelines disclosed by Fortune 100 companies for fiscal years 2012, 2013 and 2014. The data included covers changes in prevalence of ownership guidelines for directors, common ownership policy designs implemented, changes in value of target director stock ownership amounts, and use of holding period requirements within ownership guidelines.
Read the entire report by Seamus O’Toole and David Outlaw, originally published by Equilar.